RARC Report

Report Number 

RARC-WP-15-006

Will the Check 

Be in the Mail?

An Examination 

of Paper and 

Electronic 

Transactional 

Mail

February 9, 2015
Transactional mailpieces — primarily household bills and 

payments — generated $18.5 billion in revenue in fiscal year 

(FY) 2013, more than a quarter of the U.S. Postal Service’s 

total revenue that year.1

 Like many other mail segments, 

transactional mail is contending with the onslaught of digital 

communications, in particular electronic options for bill delivery 

and payment.

The U.S. Postal Service Office of Inspector General (OIG) 

collaborated with the consulting firm InfoTrends to conduct 

research to better understand customers’ preferences for 

receiving and paying bills. Specifically, the research examines 

3 months of customer billing data from a major U.S. utility 

company. The OIG and InfoTrends then interviewed executives 

who manage bill delivery and payment processing to help 

determine how the utility’s delivery-and-payment trends 

compare to those at other utilities and even in other industries.

The utility company’s billing data revealed that 91 percent of 

customers chose to receive their bills by mail despite a clear 

preference to pay bills online. Even among the utility’s newest 

customers — those expected to be more digitally savvy — an 

average of 89 percent opted to have their bills mailed to them. 

1 OIG calculation based on U.S. Postal Service, The Household Diary Study: 

Mail Use & Attitudes in FY 2013, May, 2014, 

http://www.prc.gov/Docs/90/90246/USPS_HDS_FY13.pdf, and U.S. Postal Service, 

Public Cost and Revenue Analysis: Fiscal Year 2013, December, 2013, 

http://about.usps.com/who-we-are/financials/cost-revenue-analysis-reports/

fy2013.pdf.

Why? Research shows that consumers value the physical 

mailpiece as a record-keeping tool and reminder to pay. 

Moreover, consumers do not save any money by receiving their 

bills digitally, whereas they save postage when they pay online. 

The executives we interviewed said this was consistent with 

what they have observed in the industry.

Digital billing is less expensive than hard-copy billing, and 

cost is always a factor in any business decision. But customer 

satisfaction rates are a primary driver for companies that send 

transactional mail. While over time more customers may opt 

to receive bills electronically, our research shows that physical 

mail still plays an important role today and will continue to do so 

in the near future.

Executive 

Summary

Physical mail still plays 

an important role today 

and will continue to do so 

in the near future.

Highlights

Customers continue to prefer receiving bills 

by mail, but show a willingness to pay their 

bills electronically.

While companies look to minimize bill delivery 

and payment costs, they cannot ignore customer 

preferences, as customer satisfaction is a 

top priority.

Offering a variety of bill delivery and payment 

options can lead to higher customer satisfaction.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Table of Contents Cover

Executive Summary......................................................................................1

Table of Contents..........................................................................................2

Observations ................................................................................................3

Table of Contents ....................................................................................4

Introduction..............................................................................................6

An Overview of the Transactional Mail Market...................................6

The Importance of Customer Satisfaction..........................................7

Research Background.............................................................................9

Objective ............................................................................................9

About Utility East................................................................................9

Methodology.....................................................................................12

Key Findings..........................................................................................13

Foreword ..........................................................................................13

Electronic Bill Delivery and Payment Was the 

Least Expensive for the Utility..........................................................13

Customer Service Calls Contributed Greatly to 

Average Monthly Cost per Customer...............................................14

Most Customers Chose to Receive Paper Bills by Mail ...................17

Newer Customers Were More Likely to Pay Bills Electronically 

Than by Mail.....................................................................................17

Adoption Rates for Electronic Bill Delivery Were Far Lower 

than Rates for Electronic Bill Payment.............................................21

Conclusions...........................................................................................24

Contact Information ....................................................................................26

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006 2
Observations

 

Analysis

February 2015

Will the Check Be in the Mail?

An Examination of Paper and Electronic Transactional Mail

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006 3
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Table of Contents

Introduction .................................................................................................... 6

An Overview of the Transactional Mail Market ......................................... 6

The Importance of Customer Satisfaction.................................................. 7

Research Background ..................................................................................... 9

Objective...................................................................................................... 9

About Utility East........................................................................................ 9

Methodology ............................................................................................... 12

Key Findings.................................................................................................... 13

Foreword..................................................................................................... 13

Electronic Bill Delivery and Payment Was the Least Expensive 

for the Utility........................................................................................ 13

Customer Service Calls Contributed Greatly to 

Average Monthly Cost per Customer................................................... 14

Most Customers Chose to Receive Paper Bills by Mail.............................. 17

Newer Customers Were More Likely to Pay Bills Electronically 

Than by Mail ........................................................................................ 17

Adoption Rates for Electronic Bill Delivery Were Far Lower than 

Rates for Electronic Bill Payment........................................................ 21

Conclusions ..................................................................................................... 24

List of Tables

Table 1: Adoption Rate of Physical Bill Delivery and 

Payment by Households ................................................................................. 10

Table 2: Distribution of Bill Delivery and Payment Scenarios....................... 10

Table 3: Bill Delivery and Payment Options for Utility East Customers ....... 11

Table 4: Utility East’s Average Monthly Bill Delivery and 

Payment Workflow Costs per Customer......................................................... 13

Table 5: Bill Delivery and Payment Habit Shifts for New Customers............ 17

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

List of Figures

Figure 1: Total Call Center Volume Tracking for 

Primary Customer Sample.............................................................................. 15

Figure 2: Total Average Bill Delivery and Payment Workflow 

Cost per Customer........................................................................................... 16

Figure 3: Electronic Delivery Adoption by Date of Service Initiation ........... 18

Figure 4: Electronic Delivery Adoption Rates for New and 

Existing Customers ......................................................................................... 19

Figure 5: Primary Reason Why Customers Reverted to 

Physical Bill Delivery ...................................................................................... 20

Figure 6: Electronic Payment Adoption by Date of Service Initiation........... 22

Figure 7: Electronic Payment and Delivery Adoption Rates for 

New Customers ............................................................................................... 23

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Introduction

Consumers and businesses are conducting more communication and 

commerce online today than ever before. Consequently, businesses are 

adjusting how they manage and plan for communications with existing 

customers. Bill-sending organizations—such as financial institutions and 

utility companies—look to cut costs, often encouraging electronic-only 

delivery of those communications to avoid postage costs. The money those

companies spend in postage to send bills and the money consumers spend 

in postage to pay them is a big business for the Postal Service. Case in 

point, in FY 2013 the transactional mail segment accounted for $18.5 billion

of revenue (27.5%) for the Postal Service.1

To better understand these market dynamics, the U.S. Postal Service 

Office of Inspector General (OIG) collaborated with InfoTrends to help 

further explore how consumers’ preferences for receiving and paying bills

are evolving. The primary research effort consisted of an analysis of three 

months of customer billing and payment data from a large utility, 

supplemented by interviews with key stakeholders in the customer 

communications market. The stakeholder interviews revealed several key 

insights into the reality of today’s transactional mail market, as well as the 

role of customer satisfaction. 

An Overview of the Transactional Mail Market

American consumers received 24 billion household bills and statements in 

2013.2 Despite strong business desire to drive these communications to 

electronic-only delivery, consumers continue to prefer receiving paper bills 

in the mail. In fact, the Postal Service delivered nearly 80% of those bills 

 1 U.S. Postal Service Office of Inspector General (OIG) calculation based on U.S. Postal Service, 

The Household Diary Study: Mail Use & Attitudes in FY 2013, May, 2014, 

http://www.prc.gov/Docs/90/90246/USPS_HDS_FY13.pdf, and U.S. Postal Service,

Public Cost and Revenue Analysis: Fiscal Year 2013, December, 2013, 

http://about.usps.com/who-we-are/financials/cost-revenue-analysis-reports/fy2013.pdf.

2 Matt Swain, “Fast-Evolving Tactics for Customer Communications, Outsourcing, and Bill 

Payment Adoption,” Document Strategy, December 16, 2014, 

http://www.documentmedia.com/Main/articles/1537.aspx. 

Consumers continue 

to prefer receiving 

paper bills in the mail.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

and statements.3 However, there has been a more rapid transition away 

from physical mail in household bill payments, with the majority of 

consumers preferring to pay bills online. In fact, just 37% of consumer bills 

were paid by mail in fiscal year (FY) 2013, a 45% decline since FY 1998.4 

Our 2014 research supported this perspective, with the majority of 

customers preferring to receive paper bills through the mail, but paying

their bills electronically. The actual percentages of customers that choose 

to either receive or pay their bills digitally vary widely across industries, 

with utility companies having far lower adoption rates than most other 

industries. Even among utilities, the percentage of their customers that 

choose to receive and pay their bills electronically depends on the type and 

size of the company, as well as the level of regulation the utility faces.5

The cost of sending physical bills through the mail also varies, but is 

consistently more expensive than sending bills electronically. These costs

primarily include bill creation, delivery, and payment processing. Often 

absent from these calculations are other associated costs, such as the 

money the company forgoes while it waits to receive a customer's 

payment, late payment penalties, and default rates—making it more 

difficult to compare the true cost of sending bills and receiving payments 

through the mail versus electronically. One executive that we interviewed 

called companies’ attempts to calculate these true costs the “wild west.” 

The Importance of Customer Satisfaction

Instead of focusing exclusively on costs, representatives of the companies 

we interviewed highlighted the importance of customer satisfaction as a 

key metric for success. In fact, most utilities are primarily driven by 

customer satisfaction, even more so than by the true costs associated with 

physical or digital billing and payment processing. A high rating by 

consumer satisfaction researcher, J.D. Power and Associates is considered 

 3 Customer Communications Delivery Market Sizing & Forecast: 2013-2018, InfoTrends, 2014.

4 The Household Diary Study: Mail Use & Attitudes in FY2013, U.S. Postal Service, May 2014.

5 Some states and localities require utilities and other regulated industries to mail certain types of 

communications to consumers physically.

Many companies do not 

include associated costs 

when evaluating mail and 

digital channels, making it 

more difficult to compare 

the true costs of bill delivery 

and processing payments.

Most utilities are 

primarily driven by customer 

satisfaction, even more so 

than by the costs associated 

with physical or digital billing 

and payment processing.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

“a badge of honor” in this industry. In fact, some executives’ incentive

packages are dependent on strong customer satisfaction ratings.

In an effort to put customers first, many transactional mailers do not try to 

pressure customers into moving to all digital communication, even though 

it could save the company money. Most companies we interviewed agreed 

that incentives were ineffective as long-term solutions to get customers to 

switch to electronic billing and payment. 

Rather than relying on incentives, billers try to encourage customers to go 

all-digital by creating a better online or mobile experience. While cost 

reduction is important, good customer experience usually trumps the use 

of negative incentives like charging customers for paper versions of their 

bills. One approach to drive customers to electronic billing is to set the 

default for new customers to paperless delivery, while others automatically 

register customers who pay online to also receive their bills electronically. 

However, these tactics still carry a risk of customer backlash and could 

have a negative impact on the company’s relationship with the customer. 

In general, customers value having options for bill delivery and payment.

Financial services technology company Fiserv calls these customers 

“Bill Pay Omnivores” because they are likely to choose a variety of 

channels to receive and pay bills.6 Separately, a 2014 Fiserv survey found 

that 43% of customers had a higher level of satisfaction with billers that 

offered multiple delivery and payment options.7 Using a data-driven 

approach to more closely examine these delivery and payment preferences 

related to household transactional mail, InfoTrends, in collaboration with 

the OIG, developed and completed a case study evaluating the costs of 

paper and electronic bill delivery and payment for residential consumers 

of a domestic utility company.

 6 Eric Leiserson, Boosting Satisfaction and Loyalty with Billing and Payments, Fiserv, p. 3, 2014.

7 Ibid.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Research Background

Objective

The primary objective of this project was to quantify the costs associated 

with each of three primary billing scenarios, including all expenses related 

to bill production and delivery through bill payment for residential 

customers of a large utility. A secondary goal was to explore the costs, 

benefits, and deterrents for the residential bill payer for each of these bill 

delivery and payment options and track customers’ overall bill delivery

and payment behavior relative to physical and electronic channels.

About Utility East

Without a utility company willing to share its data, this project would 

not be possible. A utility company that serves a major metropolitan area 

in the Eastern United States —which will be referred to in this paper as 

“Utility East”— generously provided access to three months of billing data 

for a subset of its customers.All personally-identifiable information of the 

customers was removed before the data was received.

Utility East is a Fortune 500 company providing electric and gas services 

to more than 3 million customers. Like any major metropolitan area, its 

residential customer base is highly diverse in terms of customer 

demographics. More than 85% of Utility East’s customer base is 

residential customers, with upwards of 15% turnover each year. Customers 

of Utility East can receive their bills by mail or electronically and also have 

a variety of payment options. Table 1 shows the percentages of Utility East 

customers that continued to pay and receive bills through the mail, 

compared to the national average of all transactional mailing companies.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Table 1: Adoption Rate of Physical Bill Delivery and 

Payment by Households

Means Utility East8 National Average9

Bill Delivery

Mail 91% 79%

Electronically 9% 21%

Bill Payment

Mail 25% 37%

Electronically 71% 59%

Other Means10 3% 4%

Table 2 provides a breakdown of delivery and payment approaches for the 

2 million residential Utility East customers whose data we were granted

access to in May of 2014. As might be expected, customers who sign up for 

electronic bill delivery choose to pay electronically as well.

Table 2: Distribution of Bill Delivery and Payment Scenarios 

Bill Delivery and Payment Scenarios Residential Customers

Receive by mail 91%11

 Pay by mail 25%

 Pay electronically 62%

 Pay by other means12 3%

Receive electronically 9%

 Pay by mail 0%

 Pay electronically 9%

 Pay by other means 0%

According to company estimates, Utility East sends about 30 million 

residential bills each year. It also sends over 550,000 termination-of-service

notifications to residential addresses annually, which are sent if a 

 8 Related percentages in this category total 99% due to rounding.

9 National figures for bill delivery across all industries from Customer Communications Delivery 

Market Sizing & Forecast: 2013-2018, InfoTrends, 2014; national figures for bill payment from

The Household Diary Study: Mail Use & Attitudes in FY2013, U.S. Postal Service, 2014.

10 This includes payment through a visit to a walk-in center and field collection.

11 Related percentages in this category total 90% due to rounding.

12 This includes payment at a walk-in center and field collection. Payment by phone is considered 

electronic payment.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

customer is carrying an unpaid balance for an extended time period 

(generally 3 months or more). Utility East receives approximately 7 million 

inbound paper check and money order payments by mail each year. While 

it outsources its printing needs to an external provider, Utility East 

processes checks through its subsidiary.

Billing and payment workflows can vary significantly from one company to 

another. These workflows can depend on the company’s size, industry, 

software, partnerships, incentives offered for certain delivery channels, 

breadth of payment channels, and methods enabled, as well as company 

policy on frequency and channel of reminder communications associated 

with a billing lifecycle. Each of these workflow variations yields different 

average costs. Utility East is similar to other utilities we interviewed in that 

it does not offer any personal incentives for customers choosing one 

delivery or payment channel over another. The executives we interviewed 

also said it is standard for a utility to not send bill pay reminders until the 

bill is months past due. Table 3 lists the bill delivery and payment options 

that Utility East offers. 

Table 3: Bill Delivery and Payment Options for 

Utility East Customers

Delivery Options Payment Sources Payment Types

Physical Mail via 

Postal Service

Electronic Delivery

via its website

Electronic Delivery

via bank website

Physical Mail via Postal Service

Direct debit from bank

Utility East website

Utility East direct payment plan

Bank bill pay service

Phone (CSR)13 and (IVR)14

Walk-in center

Paper check

Money order

e-Check (ACH)15

Credit card

Debit card

Cash

 13 Customer Service Representative

14 Interactive Voice Response (IVR) is a technology that allows a computer to interact with humans 

through the use of voice and telephone tones from a keypad. In this instance, Utility East uses the 

technology to allow customer questions and payments to be addressed through the automated 

system without requiring a customer service representative.

15 Automated Clearing House (ACH) automatically deducts the full amount due from the customer’s 

bank account on the same day each payment cycle. Businesses often prefer ACH due to its low 

fees, direct tie to customers’ bank accounts, and predictable payment schedule.

Billing and payment 

workflows can vary 

significantly from one 

company to another and 

yield different average costs.

11

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Methodology

Utility East provided InfoTrends with 2 million residential customer 

records for the billing months of May, June, and July of 2014. With the 

support of the OIG, InfoTrends analyzed a subset of these records with 

a focus on how customers received and paid their bills, as well as factors 

that influenced the cost of each method, including fluctuations in call 

center volume. 

InfoTrends broke residential customers into four main groups. InfoTrends 

opted to randomly select a subset of the 2 million records it received to 

make the volume of data more manageable.16 The first three groups each 

consisted of 5,000 customers randomly selected within each of the 

following cohorts:

• Bills delivered by mail and paid by mail

• Bills delivered by mail and paid electronically

• Bills delivered and paid electronically

Customers who are billed electronically and pay by mail represented an 

insignificant portion of the Utility East customer base, so were not 

analyzed in this study. This was also the case for customers who paid by 

other means, such as in person at walk-in centers.

The data that Utility East collected and provided for analysis lacked 

sufficient information about payment cycle lengths for each of the cohorts 

tracked. Because of this, InfoTrends was not able to determine how 

quickly each cohort paid after receiving a bill. Other potential data points, 

including defaults, follow-up mailings, and collections calls, proved to 

either have an insignificant financial impact or were irrelevant to the 

operations of Utility East.

 16 To perform the full range of analytics needed for the project, the customer billing data had to 

be cleaned of irregularities in data entries and reconcile nuances within the data files. It would 

not be feasible to do this for the entire customer database of 2 million records within the scope 

of the project.

12

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

InfoTrends also monitored the 5,000 newest residential Utility East 

customers in the dataset as of the May billing cycle and tracked changes in 

their behavior over the first three months. From the insights gained in this 

exercise, InfoTrends decided to dig deeper into specific data related to 

when a resident became a customer of Utility East. This included a review 

and mapping of more than 1 million customer records, dating back to

customers joining Utility East in January of 2007.

Key Findings

Foreword 

The following findings are specific to Utility East for a timeframe of 

three months. While the paper includes generalizations about how 

these insights could be applied to the broader market, it is important 

to recognize the data limitations and should by no means be used as a 

measure of the market standard. 

At times, the paper includes supplementary information from InfoTrends’ 

ongoing tracking of the customer communications market and the surveys 

it conducts. 

Electronic Bill Delivery and Payment Was the Least Expensive 

for the Utility

It may not be surprising that serving a customer who receives a bill 

electronically and pays it electronically costs Utility East less than a 

customer who receives a bill by mail and pays by mail or electronically. 

Table 4 reviews the costs that contributed to the total cost for bill delivery

and payment, both physically and digitally. 

Table 4: Utility East’s Average Monthly Bill Delivery and 

Payment Workflow Costs per Customer

Delivery Payment Processing

Subtotal

Call 

Center Total

Type Cost Type Cost Cost

Electronic $0.05 Electronic $0.01 $0.06 $0.26 $0.32

Mail $0.49 Electronic $0.01 $0.50 $0.30 $0.80

Mail $0.49 Mail $0.04 $0.53 $0.23 $0.76

While costs to send and 

process bills electronically is 

less expensive for Utility East, 

these calculations did not 

include other considerations 

such as late payment 

penalties, customer defaults, 

technology investments and 

costs associated with the 

payment cycles.

13

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

When factoring in costs associated with bill delivery, call center calls, and 

payment processing, the average monthly cost to serve a Utility East 

customer who received and paid a bill electronically was $0.32. This is 

primarily driven by the low cost of electronic bill delivery, which averages 

$0.05 per piece compared to $0.49 for printing, processing, and mailing a 

hardcopy bill. When comparing Utility East’s delivery costs to other 

estimates for utilities, the costs of physical delivery by Utility East fell 

within the industry range. The cost of electronic delivery for Utility East 

was far less than some industry estimates.17

When call center data is factored into these averages, the cost for each 

cohort increases by between $0.23 and $0.30—showing that call center 

costs contribute greatly to the average monthly cost per customer. Some

costs—such as those related to composing the documents to be delivered, 

termination notices, and field collections—have been excluded from this 

analysis as these costs did not contribute significantly to the per-customer 

cost of Utility East. As noted earlier in the paper, many of these financial 

costs are not tracked when determining the total cost to send bills and 

process payments physically or digitally.

Customer Service Calls Contributed Greatly to Average Monthly

Cost per Customer

The customer call center volume contributed a sizeable per customer cost, 

which is an often-overlooked component of a billing and payment

workflow. Because these calls require one-on-one human interaction, each 

costs the utility company $6.44, which is over 13 times the cost of

delivering a bill via the Postal Service. InfoTrends research shows that 

4 out of 5 Americans will call their providers when they have a question 

about a bill,18 and these costs add significantly to the amount of money it

takes to receive and process a payment. While Utility East did not provide 

detailed data that would indicate the reasons why each customer contacted 

the call center, discussions with their team led InfoTrends to conservatively

 17 The physical delivery was estimated fall between $0.50 and $1 per communication while e-mail 

was up to half of that cost.

18 Annual State of the Customer Communications Market Survey, InfoTrends, 2014.

The customer call center 

volume contributed a 

sizeable per customer cost, 

which is an often overlooked 

component of a billing and 

payment workflow.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

estimate that about 30% of the calls were billing-related. Figure 1 shows 

total in-bound call center volume over the three month timeframe for 

each cohort.

Figure 1: Total Call Center Volume Tracking for 

Primary Customer Sample

Without specific data on the reason for each call, it is unclear why there 

was a jump in call center volume from May to June across all cohorts; 

however it is possible that volume spiked when customers saw higher bill 

amounts due to increases in electricity usage (often due to increased use of 

air conditioners during that timeframe). 

Using the direction from Utility East that 30% of call center traffic is 

billing-related, Figure 2 shows how the cost of the billing and payment 

lifecycle changes when this customer service factor is accounted for.

469

564

436

671

947

782

564

840

763

Mail/Mail Mail/Elec Elec/Elec

May

June

July

Deliver by Mail,

Pay by Mail

Deliver by Mail,

Pay Electronically

Deliver Electronically,

Pay Electronically

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Figure 2: Total Average Bill Delivery and Payment Workflow 

Cost per Customer

Figure 2 illustrates the effect that billing-related call center volume has on 

the total costs for each cohort. The data showed that customers who 

received and paid their bills by mail accounted for the least call center 

volume. Customers who received and paid their bills electronically had a 

slightly higher incidence of call center volume. Customers who received 

their bills by mail and paid electronically were the most likely to contact 

Utility East’s call center. Further discussion with Utility East regarding the 

potential reasons for increased call center volume within this cohort

revealed that it could be a bi-product of electronic payments, including 

payments made over the phone. For instance, if a customer who normally 

pays by mail receives a notice of termination or has their power turned off 

for defaulting on payments, then the most immediate course of restoring 

power is to call Utility East and make an electronic payment. 

The team studied other potential cost factors in the billing data that are 

not included above because the impacts on total cost were negligible. For 

instance, while customer defaults on bills and sending collection agents to 

a home incur significant costs, they were so infrequent as to not affect the 

bottom line. 

$0.53 $0.50 

$0.06 

$0.23 $0.30 

$0.26 

Mail/Mail Mail/Electronic Electronic/Electronic

Call Center Cost

Delivery/Payment Cost

Deliver by Mail,

Pay by Mail

Deliver by Mail,

Pay Electronically

Deliver Electronically,

Pay Electronically

$0.76 $0.80

$0.32

Customers who received 

and paid their bills by 

mail accounted for the 

least call center volume.

16

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Most Customers Chose to Receive Paper Bills by Mail

A review of the habits of the 5,000 newest customers revealed 

that only three (0.06%) had opted for electronic bill delivery after the 

three month tracking period. In fact, the same three customers opted 

to receive their bills electronically in the first month of tracking.

Table 5 shows the progression of delivery and payment shifts among 

these Utility East customers.

Table 5: Bill Delivery and Payment Habit Shifts for 

New Customers

Bill Delivery

Method

Bill Payment 

Method May June July

Mail

Mail 1,294 1,202 1,092

Electronic 3,625 3,715 3,824

Other Means 78 80 81

Electronic

Electronic 3 3 3

Other Means 0 0 0

Newer Customers Were More Likely to Pay Bills Electronically 

Than by Mail

While the data revealed a 5.5% growth in electronic payment at the 

expense of payment by mail from May to July, there was no change in 

customers who wanted to receive their bills electronically. Knowing that 

overall electronic delivery adoption rates are about 9% at Utility East, 

InfoTrends conducted a separate analysis of more than a million 

residential customers who received their July 2014 bill electronically. A 

study of this population and when they became a Utility East customer 

revealed that the electronic adopters represented an average of 11% of the 

total population of customers who also became Utility East customers in 

the same month they joined. These adoption rates fell within the range 

reported by bill delivery and payment executives for utilities, who cited 

paperless adoption from the high single digit percentages to the teens. 

Figure 3 shows the percentage of residential customers who received their 

Out of the three-month 

sample, some newer 

customers moved from 

physical to electronic 

payment, but none moved 

to electronic delivery.

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Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006
Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

July 2014 bill electronically, based on the month and year in which they 

became a customer of Utility East.

Figure 3: Electronic Delivery Adoption by 

Date of Service Initiation

Figure 3 shows a clear recurring pattern, with customers who established 

new accounts during the months of June through September being the 

most likely to choose electronic delivery. This could speak to the 

demographics of people who move during these time periods, rather than 

a statement about those specific months. For instance, college students, 

recent graduates starting new jobs, and families working around a 

school-year schedule tend to move during these months.

Utility East does not actively promote electronic delivery over hardcopy 

delivery; rather, it provides passive encouragement on its website and an 

expressive environmental message on the envelope. Thus, this data may 

represent a more accurate reflection of customer preferences, as there are 

no additional incentives for the customer to change their billing approach. 

Absent any additional enticement, most customers retained paper delivery

and delayed their decision to switch away from it. Most customers that 

chose electronic payment continued to receive paper bills, even after 

visiting Utility East’s website. These customers had already taken the time 

to establish a digital identity with the company in order to pay online, but 

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chose not to move to electronic bill delivery. Each time these users log on, 

they are given the option to switch to electronic billing.

The newest Utility East customers—those that had joined in the last nine 

months of the data collection period—adopted electronic billing at a lower 

rate than established customers, as seen in Figure 4. 

Figure 4: Electronic Delivery Adoption Rates for 

New and Existing Customers

The electronic billing adoption rate of new customers started out slowly 

(with fewer choosing this method in the first few months), but then 

ramped up significantly. The “established customer” curve in Figure 4 is 

an average of the current electronic delivery adoption of customers who 

initiated their service in each of those months over the previous six years. 

As Figure 3 demonstrates, the data from past years reveals a consistent 

pattern, with electronic delivery adoption rates fluctuating but never 

surpassing 16% paperless adoption. Assuming the adoption rate of the 

newest Utility East customers will eventually reach an electronic delivery

adoption rate that mirrors those of the existing customers, the data may 

indicate that new customers do not necessarily adopt electronic bill 

delivery right away, but instead take several months to switch to electronic 

bill delivery. A comparison of the adoption rates of established and new 

customers also suggests that another 2% of electronic adoption may come 

from the new customer base in the next few years of their relationship with 

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May Apr Mar Feb Jan Dec Nov Oct Sept Aug July June

Established customers

New customers

Average electronic delivery adoption rate by month of 

service initiation from June 2007 to May 2013. 

New customer electronic delivery adoption by month of 

service initiation from June 2013 to May 2014.

Electronic bill delivery 

adoption rates fluctuate 

but never surpass 

16% paperless adoption.

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© InfoTrends 2015

Utility East. Interestingly, Fiserv research found that 45% of consumers 

surveyed preferred to activate electronic billing when opening an 

account.19 As noted earlier, the rate of electronic adoption for new 

Utility East customers was much lower. 

Separate from this analysis, InfoTrends tracks and researches the billing 

and payments markets closely. While InfoTrends shows overall electronic 

delivery of bills and statements as growing, it has also found that 

sometimes customers revert to paper delivery after sampling an 

electronic-only experience. In fact, one out of three people surveyed in 

2014 (657 out of 2,000) said that they had reverted to paper delivery at 

least once in the past. Understanding the consumers’ reasons for making 

the switch back to hard copy bill delivery could also help explain why so 

many consumers do not adopt electronic billing when they are a new 

customer. Figure 5 shows these customers' reasoning for moving back to 

physical bill delivery.20

Figure 5: Primary Reason Why Customers Reverted to 

Physical Bill Delivery

 

19 Eric Leiserson, E-Bill Marketing in the Evolving Social Landscape: Five Emerging Ways to 

Increase E-Bill Adoption, Fiserv, p. 3, 2013.

20 Annual State of the Customer Communications Market Survey, InfoTrends, 2014.

One out of every three 

people surveyed in 

2014 said that they had 

reverted to paper delivery 

at least once in the 

past, after sampling an 

electronic-only experience.

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© InfoTrends 2015

With InfoTrends' research also showing that customers value having a 

hardcopy for their records and the physical bill as a reminder to pay, this 

data appears to support why the majority of customers receive their bills 

by mail, but then pay electronically. The Postal Service promoted the 

security of physical bill delivery in a recent advertising campaign, which 

was directed at customers like those from the InfoTrends research, who 

may not be willing to move their record keeping online.21

This movement from one billing method to another is not unique to 

Utility East. Fiserv research revealed that customers often change their 

billing methods month to month. The study reported that over 15 million 

U.S. households switch their bill payment methods each month, and that 

the majority of U.S. households now use multiple methods to pay their 

bills.22 Allowing customers to choose from multiple billing and payment 

options had a positive impact on customer satisfaction with the biller.23

Adoption Rates for Electronic Bill Delivery Were Far Lower than 

Rates for Electronic Bill Payment

InfoTrends analyzed how the same one million-plus customers that 

received electronic bills as of July 2014 paid their most recent bill. That 

analysis revealed a very high preference for electronic payment, as seen in 

Figure 6. The Figure also includes electronic delivery rates overlaid to 

show the disparity. 

 21 “Hacked,” U.S. Postal Service, 2011, https://www.youtube.com/watch?v=oysFmSVzCnM. 

See also “Postal Service Launches New TV Ad Campaign,” Ed O’Keefe, Sept. 30, 2011, 

http://www.washingtonpost.com/blogs/federal-eye/post/postal-service-launches-new-tv-adcampaign/2011/09/29/gIQABMTS8K_blog.html.

22 Eric Leiserson, Boosting Satisfaction and Loyalty with Billing and Payments, Fiserv, p. 3, 2014.

23 Ibid.

The majority of U.S. 

households now use multiple 

methods to pay their bills.

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Will the Check be in the Mail? An Examination of Paper and Electronic Transactional Mail

© InfoTrends 2015

Figure 6: Electronic Payment Adoption by 

Date of Service Initiation

Electronic payment adoption for these Utility East customers averages 

nearly 78%, with new customers on their third billing cycle (March 2014) 

exceeding that average. Utility East offers a direct payment plan for 

customers, which automatically debits the customer’s account after ten 

business days. With an average payment cycle of 27 days across all 

customers, the direct payment plan allows Utility East to receive payments

significantly faster than other options.

Reviewing this extended data set reveals a similar trend of peaks and 

troughs depending on the month when the resident became a Utility East 

customer, but also shows a trend toward increased electronic payment for 

newer customers. Residents who became customers in 2007 averaged 

electronic payment rates of 74%, compared to almost 80% for those who 

became customers in 2013. This could be a result of the demographics of 

this particular group of new customers (which Utility East does not 

collect), or it might point to something more behavioral. For instance, it is 

possible that when someone moves and becomes a new customer they 

revisit their approach to billing and payments. 

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© InfoTrends 2015

Consumers may see value in paying bills electronically, as it helps them 

avoid associated costs, such as paper checks and stamps.Using estimates of a 

single check costing $0.1524 and a stamp at $0.49, the monthly cost to the 

consumer is about $0.64 per bill paid by mail. With electronic bill 

payment often being free to the consumer, the cost to send a payment by 

mail might be a disincentive.

New customers to Utility East that adopted an electronic payment 

approach immediately appeared to keep the same approach as they 

became longer-standing customers. Comparing electronic bill delivery and 

electronic payment adoption shows that it takes more time to ramp up, as 

shown in Figure 7.

Figure 7: Electronic Payment and Delivery Adoption Rates 

for New Customers

This difference in behavior may be the result of the fact that—like many 

billing relationships—Utility East customers receive paper bills by default, 

but there is no default type of payment. Customers must take action to 

establish a payment approach, whereas the delivery approach has already 

been dictated to the customer, and they must take action to say that they 

would prefer electronic delivery. Even so, InfoTrends market research 

shows that consumers see value in receiving their bills by mail, specifically 

 24 Checks Unlimited, 2014.

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May '14 Apr '14 Mar '14 Feb '14 Jan '14 Dec '13

Electronic Payment Adoption

Electronic Delivery Adoption

Most customers adopted electronic payment 

immediately after initiating their service.

While some customers opted for electronic delivery after 

initiating their service, it took several months for them to do so.

Consumers see value in 

receiving their bills by mail, 

specifically to have the 

hardcopy for filing purposes 

and to have it serve as a 

reminder to pay.

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© InfoTrends 2015

to have the hardcopy for filing purposes and to have it serve as a reminder 

to pay. For consumers who prefer electronic delivery, they most often cite 

convenience and environmental reasons.25 Some consumers also lack the 

means to receive and pay bills electronically, while others may distrust the 

technologies involved with electronic bill delivery and payment. Ultimately, 

when Utility East’s customers chose a payment approach, the vast majority 

of them opted for electronic payment.

Executives from the companies we interviewed noted a similar gap 

between the percentages of people who chose to receive bills electronically 

and those who chose to pay bills electronically. A 2014 Fiserv report also 

recognized this difference, dubbing it the “eGap.”26

Conclusions

The Postal Service continues to play an important role in Utility East’s 

billing and payment workflow, with most customers continuing to receive 

their bills by mail. The data did not indicate a dramatic shift in electronic 

delivery adoption at the hands of new customers. The Postal Service's role 

in delivering inbound payments to Utility East is less significant. Most 

customers chose to pay their bills via alternative means, possibly because 

of an economic incentive for Utility East customers to pay bills 

electronically, by saving money on the cost of the stamp. In the case of bill 

delivery, there is less incentive for Utility East customers to receive their 

bills electronically, since they are not paying to receive the bill by physical 

mail. Of course, the incentive is much greater for Utility East, since the 

cost of bill production and delivery falls on the company. While the access 

to Utility East's data was invaluable to this project, the data must be 

treated as a single reference point and readers must understand that there 

are many billing and payment workflows across the United States that 

could show variable results. That said, many of the findings in this case 

study were corroborated by interviews with executives who managed 

billing and payment channels for other companies.

 25 Annual State of the Customer Communications Market Survey, InfoTrends, 2014.

26 Eric Leiserson, State of E-Bill Adoption, Fiserv, p. 2, 2014.

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© InfoTrends 2015

Further research on this topic—whether with another utility company 

or in a separate industry—would be highly valuable to understanding the 

overall billing and payment workflow costs to a company. A study that 

incorporates additional data could reveal the true costs to a company of 

sending bills and processing payments either through the mail or 

electronically. Additional data could include the amount of time it takes 

customers to pay, the cost to a company when a customer defaults on a 

payment, and the relative costs of how companies handle customers that 

default on payments. Some companies handle defaults by sending 

additional mailings, while others use automated phone messaging, and 

some have call center personnel reach out to the customer for payment.

Ultimately, the Postal Service should not expect consumer preferences to 

remain static. As mobile broadband becomes increasingly available across 

the United States, more people will likely become comfortable with a 

digital lifestyle, including electronic billing. The Postal Service must plan 

for the future by examining and being prepared to serve the digital bill 

delivery and payment needs of the American public.

Further research could 

reveal the true costs 

of sending bills and 

processing payments.

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Report Number RARC-WP-15-006
U.S. Postal Service Office of Inspector General

1735 N. Lynn Street

Arlington, VA 22209

Telephone: 703-248-2100

www.uspsoig.gov

For media inquiries, contact Agapi Doulaveris

Telephone: 703-248-2286

adoulaveris@uspsoig.gov

26

Will the Check Be in the Mail? An Examination of Paper 

and Electronic Transactional Mail

Report Number RARC-WP-15-006